Market watchdog also mandates monitoring agency for cos raising more than Rs 100 crore in IPO
The Securities and Exchange Board of India (Sebi) has taken the first major step towards development of the commodity derivatives market by approving introduction of options contracts since taking over the market's regulation in September 2015.
The Sebi board, which me to n Wednesday , made it mandatory fo r companies raising more than Rs 100 crore through initial public offering (IPO) to appoint a monitoring agency to keep track of the use of funds and barred Non-resident Indians (NRIs) and entities owned by them from subscribing to participatory notes.
“In addition to amendment to the regulation, we also need amendments in the rules, which we will pose it to the government very quickly . I don't want to give timeframe but this certainly is priority for commodity derivatives market and high priority for us,“ Sebi chairman Ajay Tyagi said during the press conference post board meeting.
Tyagi said that options in commodities will devolve into futures contracts and that detailed guidelines would be worked out in due course.
“The details will be worked out but it will result in derivatives and not cash because derivatives is regulated by Sebi and spot markets are not. So it will be a different kind of option.“
On institutional participation, he said that entry of players like mutual funds, banks and insurance companies will be facilitated once an expert committee formed at government level recommends how synergy between spot and futures markets could happen.
Another important measure that Sebi took is to allow merger of the commodity broking arm with the equity arm of a broker. This will allow margin fungibility and improve risk management besides ensuring more efficient use of a client's capital, said exchange and broking officials.
The Economic Times New Delhi, 27th April 2017
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